Patent regime keeps Canada on U.S. IP ‘Watch List’

In its annual Special 301 Report — released Wednesday — the United States Trade Representative resisted pressure from a bipartisan congressional group to return Canada to a “Priority Watch List” of countries with deficient intellectual property protection

However, it did echo their criticism of Canada’s patent regime, and kept Canada in a group of less serious violators.

The 2014 report begins by commending the Canadian government for the passage of the Copyright Modernization Act in June 2012 and for re-introducing the Combating Counterfeit Products Act in October 2013.

The latter, it explains, includes provisions that would give Canadian customs officials the authority to seize pirated and counterfeit goods at the border.

“The United States supports Canada’s commitment to address the serious problem of pirated and counterfeit goods entering our highly integrated supply chains and urges Canada, as it proceeds with this legislation, to expand its scope to provide authority for its customs officials to take action against such goods in-transit,” it says.

But Canada nonetheless remains on its second-tier “Watch List” — with 26 other countries including Mexico and Brazil — because of concerns about Canadian courts’ heightened utility requirements for Canadian pharmaceutical patents.

It was only graduated from the USTR’s “Priority Watch List” last year.

Their biggest complaint is the invalidation of patents through what’s known as the “promise doctrine”.

Simply put, under Canadian law patent-seekers must state what results they plan to achieve in their patent application.

“Under this amorphous and evolving standard, courts can invalidate a patent on utility grounds by construing the ‘promise of a patent’, years after the patent has been granted, leading to uncertainty for patent holders and applicants and undermining incentives for investment in the pharmaceutical sector,” the report says.

“In applying this standard, courts have invalidated a number of patents held by U.S. pharmaceutical companies, finding now that those products lack utility (i.e., not capable of industrial application), even though such products have been in the market and benefiting patients for years.”

It concludes by saying that the USTR will continue to push Canada on that and other intellectual property issues in the ongoing Trans-Pacific Partnership negotiations.